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Chinese shares tumbled more than 5 percent on Friday http://www.redwingsauthority.com/authentic-nick-jensen-red-wings-jersey/ , the biggest one-day fall in nearly three months, as news of investigations into major brokerage houses triggered widespread panic.
The Shanghai Composite Index slipped 5.48 percent to 3,436.3 points on Friday, while the Shenzhen Component Index fell 6.31 percent to close at 11 http://www.redwingsauthority.com/authentic-mike-green-red-wings-jersey/ ,961.7 points.
About 300 stocks slumped to their daily trading limit of 10 percent on Friday. Brokerages led the diving, with the sector plunging about 9.5 percent.
One of the catalysts for Friday's stock plunge was the government investigations into several domestic securities firms, Li Daxiao, director of the Shenzhen-based Yingda Securities http://www.redwingsauthority.com/authentic-michael-rasmussen-red-wings-jersey/ , told the Global Times.
On Thursday night, two securities firms, CITIC Securities and Guosen Securities, released statements that they were under investigations by the China Securities Regulatory Commission (CSRC). Both companies saw their stocks plunge to their daily trading limit on Friday.
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According to the statement, the company's shares would restart trading on Monday.
Yu Fenghui, a financial commentator, told the Global Times that the government did the right thing to tighten management on domestic brokerages.
"China's stock markets have been significantly overvalued http://www.redwingsauthority.com/authentic-martin-frk-red-wings-jersey/ , and domestic brokerages have been a major pusher. If the government does not step in with regulatory measures, the stock bubble would grow even bigger and might even trigger systematic risks in the future," he said.
But Li said that domestic investors "overreacted" on Friday.
"The fact that those securities firms are being investigated does not necessarily mean they have any serious problems," Li noted.
Other factors http://www.redwingsauthority.com/authentic-luke-witkowski-red-wings-jersey/ , including the CSRC's ending of securities firms' revenue swap business as a way of cracking down upon margin trading and the restart of a new wave of IPOs in next week, also led to the stock plunge, Li noted.
Yu argued the most fundamental reason for the stock plunge is that the real economy is facing downward pressure.
Data from the National Bureau of Statistics showed on Friday that major industrial enterprises in China saw their profits slump by 2 percent year-on-year from January to October.
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